Typology of Business Models for Emerging Grid-scale Energy Storage Technologies
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Date
2019-03-26
Authors
Malek, Kourosh
Journal Title
Journal ISSN
Volume Title
Publisher
University of Waterloo
Abstract
The main goals of this thesis are to develop, validate, and analyze emerging business models to ensure near-term market success of the grid-scale Energy Storage (ES) technologies. The main research contributions are a typology (i.e. classification according to general type) of emerging business models for investment and operational viability of grid–scale storage, validation of business models for valuation analysis of diverse grid-scale storage, and a unique technology management framework for value analysis of emerging technologies.
It is widely accepted that the intermittency of primary renewable energy sources is a limiting factor for inclusion of these technologies in autonomous power applications. ES technologies can be seen as valuable flexibility assets with their capabilities to control grid power intermittency or power quality services in generation, transmission, and distribution, as well as in end-user consumption side. When combined with sophisticated and reliable business models, grid-scale storage technologies can contribute significantly to enhance asset utilization rate and reliability of the power systems. The latter is particularly critical for deployment of regional and national energy policies of implementing renewable sources. Despite the fact that energy storage systems increase operational cost of the distributed electricity system, energy storage technologies can play a vital role in reducing overall upgrade cost of the electricity grids when renewable sources need to be integrated locally.
The main challenge of adopting ES technologies among utilities is how to match the right energy storage technology to appropriate business-operation models for a site-specific grid configuration. Current know-how and assessment tools provide substantial information around technical specifications and requirements for adopting ES technologies for various grid configurations. However, only few of the existing approaches use market driven information. The majority of the tools also suffer from a lack of detailed information relevant for business managers for decision making purposes. Currently, none of the existing tools and investment methodologies evaluate the benefits of electricity storage from the perspective of a detailed techno-economic and business-operation models. The choice of appropriate business model, complexity of regulatory and policy environment, ownership and governance structure of storage asset, financing strategies, managing revenue streams, and associated operational risks are critical for providing an accurate assessment of the viability of the emerging ES technologies.
In order to fully assess the value proposition of ES technologies, formulate their risks and opportunities profile, and develop implementation plans, a comprehensive analysis framework is needed to support integration of technical, economic and business operation perspectives. This research aims to develop a typology of different business models in the context of grid-scale ES technologies. A bottom-up approach is proposed, demonstrated, and validated to identify a generalized business model framework. The business model framework is tailored to provide a customized analysis platform for adopting emerging energy storage technologies. Several case studies are carried out based on the proposed business model framework and energy storage valuation analysis therein. Each business model, combined with thorough valuation analysis, provides insights on when deployment of individual storage technologies can be economically and technically viable. For industry looking to adapt new energy storage technologies, such analysis can provide multi-dimension considerations (cost, efficiency, reliability, best practice business operation model, and policy instruments), which can potentially lead to complete insights for strategic decision-making purposes.
Description
Keywords
Renewable Energy, Energy Storage, Technology Management, Business Model, Valuation, Grid Storage
LC Keywords
Smart power grids, Energy storage, Technology--Management